The Lucy Paint Company prepares and packages paint products. The company has two departments: (1)…

The Lucy Paint Company prepares and packages paint products. The company has two departments: (1) Blending and (2) Packaging. Direct materials are added at the beginning of the blending process (dyes) and at the end of the packaging process (cans). Conversion costs are added evenly throughout each process. Data from the month of May for the Blending Department are as follows:,Gallons: ,Beginning work in process inventory…………………………………………… 0 ,Started production……………………………………………………………………. 8,400 gallons ,Completed and transferred out to Packaging in May…………………….. 6,200 gallons ,Ending work in process inventory (40% of the way through the ,blending process)…………………………………………………………………… 2,200 gallons,Costs:,Beginning work in process inventory…………………………………………… $ 0,Costs added during May: Direct materials (dyes)………………………… 5,460 ,Direct labor………………………………………………………………………………. 920 ,Manufacturing overhead……………………………………………………………. 1,912,Total costs added during May………………………………………………………… $ 8,292,Requirements ,1. Draw a time line. ,2. Summarize the physical flow of units and compute total equivalent units for direct ­materials and for conversion costs. ,3. Summarize total costs to account for and find the cost per equivalent unit for direct materials and conversion costs. ,4. Assign total costs to units ( gallons): ,a. Completed and transferred out to the Packaging Department ,b. In the Blending Department ending work in process inventory ,5. What is the average cost per gallon transferred out of the Blending Department to the Packaging Department? Why would the company’s managers want to know this cost?

 

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